Indian health care market is under rapid transition. The economic liberalization process started in early 1990s unleashed enormous potential for economic advancement. Simultaneously, it also triggered a fast growth of private players in the health sector leading to a significant expansion of consumers’ choice set for medical care. However, there is also a growing concern that liberalization has brought forth a new set of vulnerabilities, inequalities, and insecurities especially when people seek curative care. The response of public and voluntary sector to this transition has been grossly inadequate and often misguided so far. The study highlights the need for a change in paradigm of traditional public financing and state governance in health care in the context of unchained markets in health care of India.

Methods:

The present study is based primarily on secondary data sourced from various rounds of national level health surveys, such as NFHS and NSSO, conducted since 1990. A set of primary data on households’ health care utilization, collected from three districts of West Bengal, India was used to supplement the findings. Simple descriptive statistics and an extensive review of literature were used to highlight the key issues.

Results/Conclusions:

The share of private sector in Indian inpatient care market has increased from 40 percent to 60 percent during the last two decades. The rural outpatient care market, on the other hand, has been consistently dominated by unqualified private practitioners. The drug industry has experienced an unprecedented growth – nearly six times - during the same period. However, the rapid marketisation process has also triggered catastrophic out of pocket payments which accounts for more than 75 percent of total health spend in India and led to increase in poverty by 3.6 percent and 2.9 percent respectively for rural and urban areas. The government and other non-profit agencies, therefore, require restructuring their roles in this transition. Specifically, the public sector needs to provide (1) a safety net to protect people from poverty induced by health care, (2) an equity-based public financing mechanism to reduce sharp inequalities in health care utilization, and (3) an effective regulatory framework to internalize the growth of private sector and realign its direction to national health policy targets.